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U.S. Consumer Prices Virtually Unchanged in May

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WASHINGTON (TheBlaze/AP) — U.S. consumer prices rose slightly last month, as higher energy costs partly offset cheaper food. The small increase is further evidence that inflation has been kept mostly under control.

The consumer price index ticked up a seasonally adjusted 0.1 percent in May from April, the Labor Department said Tuesday. Over the past 12 months, prices have risen just 1.4 percent.

Excluding volatile food and gas costs, core prices rose 0.2 percent in May from April. Core prices are up just 1.7 percent over the past 12 months, in line with the Federal Reserve’s inflation target of 2 percent.

Slow economic growth and high unemployment have kept wages from rising quickly. That’s made it harder for retailers and other firms to raise prices.

Tame inflation has helped consumers increase spending this year, despite slow income growth and higher Social Security taxes. It also makes it easier for the Fed to continue its extraordinary efforts to boost the economy.

The Fed is meeting Tuesday and Wednesday amid growing speculation that policymakers could soon scale back $85 billion a month in bond purchases.

If inflation were to fall too low, the Fed might be inclined to avoid pulling back on its stimulus. But economists said the small gain in prices last month isn’t low enough to alarm Fed policymakers.

In May, higher natural gas and electricity costs pushed up energy prices 0.4 percent. Gas prices were flat. Food costs fell 0.1 percent, as grocery prices dropped by the most in almost four years.

The cost for prescription and nonprescription drugs fell 0.7 percent in May, the steepest decline on record. The cost for medical services was unchanged last month.

Consumers have kept spending at a modest pace in recent months. Retail sales rose at a decent clip in May from April, the Commerce Department said last week.

The Fed has said it will continue to buy bonds until the job market improves substantially.

The Fed also says it plans to keep the short-term interest rate it controls at a record low near zero until the unemployment rate falls below 6.5 percent, provided inflation remains under control. The unemployment rate ticked up in May to 7.6 percent, though it is down 0.6 percentage points in the past year.